SUREBEAM CORP
S-1/A, EX-10.13, 2000-10-06
SPECIAL INDUSTRY MACHINERY (NO METALWORKING MACHINERY)
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                                                                  Exhibit 10.13


                             MEMORANDUM OF AGREEMENT

                                     BETWEEN

                              TEXAS A&M UNIVERSITY

                    THE TEXAS AGRICULTURAL EXPERIMENT STATION

                                       AND

                              SUREBEAM CORPORATION

/s/ Edward A. Hiler                             /s/ Ray M. Bowen
--------------------------------------          --------------------------------
Edward A. Hiler, Director                       Ray M. Bowen, President
Texas Agricultural Experiment Station           Texas A&M University



/s/ Larry A. Oberkfell
--------------------------------------
President
Surebeam Corporation

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<TABLE>
<S>                                                                       <C>
1    DEFINITIONS ........................................................  3
       1.1  Agreement ...................................................  3
       1.2  CONFIDENTIAL INFORMATION ....................................  3
       1.3  Facilities ..................................................  4
       1.4  Intellectual property rights ................................  4
       1.5  Person ......................................................  4
       1.6  SUREBEAM SYSTEM .............................................  4

2    CONSTRUCTION OF BUILDING ...........................................  4
       2.1  Construction ................................................  4
       2.2  A&M Standards ...............................................  4
       2.3  Prior Approval ..............................................  4
       2.4  Conveyance of Title .........................................  5
       2.5  Modifications and Costs .....................................  5
       2.6  Benefit to SUREBEAM .........................................  5

3    UTILIZATION AND OWNERSHIP OF THE SUREBEAM SYSTEM ...................  5
       3.1  Access to SUREBEAM SYSTEM ...................................  5
               3.1.1 By A&M .............................................  5
               3.1.2 By SUREBEAM ........................................  5
               3.1.3 Prime Hours ........................................  5
       3.2  Economic Benefits ...........................................  5
       3.3  Maintenance and Utilities ...................................  6
       3.4  Management team .............................................  6
       3.5  Research and Development Programs ...........................  6
               3.5.1 Services of Other A&M Employees ....................  6
               3.5.2 Cost ...............................................  7
       3.6  Research Data and Information ...............................  7
               3.6.1 Access to A&M Information ..........................  7
               3.6.2 Ownership of Intellectual Property .................  7
               3.6.3 Newly Created or Discovered Intellectual Property ..  7
               3.6.4 Control and Publication ............................  7
               3.6.5 Research Sponsorship ...............................  8
               3.6.6 Consortia and Groups ...............................  8
               3.6.7 Identification .....................................  8

4.   ADDITIONAL EMPLOYEES ...............................................  8
       4.1  Positions to be created .....................................  8
       4.2  Alternative funding sources .................................  8

5    CONFIDENTIALITY OF INFORMATION .....................................  9
       5.1  Duty of Recipient ...........................................  9
       5.2  Disclosure for Compliance ...................................  9

6    TERM AND TERMINATION ...............................................  9

<PAGE>

       6.1  Term ........................................................  9
       6.2  Termination for Breach or Non-Performance ...................  9
       6.3  Mutual consent ..............................................  9
       6.4  Schedule for removal of SUREBEAM SYSTEM ..................... 10

7    WARRANTIES AND LIABILITIES ......................................... 10
       7.1  Limited warranty of SUREBEAM ................................ 10
       7.2  Insurance ................................................... 10
       7.3  No waiver of immunity ....................................... 10
       7.4  Surviving provisions ........................................ 10

8    GENERAL PROVISIONS ................................................. 10
       8.1  Records ..................................................... 10
       8.2  Assignment .................................................. 11
       8.3  Research funded by SUREBEAM ................................. 11
       8.4  Entirety and Amendments ..................................... 11
       8.5  Severability ................................................ 11
       8.6  Force majeure ............................................... 11
       8.7  Notices ..................................................... 11
               8.7.1 For A&M ............................................ 11
               8.7.2 For SUREBEAM ....................................... 11
       8.8  Schedules ................................................... 11
       8.9  Governing law ............................................... 12
       8.10 Press Releases .............................................. 12

9    DISPUTE RESOLUTION PROCESS.......................................... 12

</TABLE>

<PAGE>

                             MEMORANDUM OF AGREEMENT

         This Agreement is made and entered into between TEXAS A&M UNIVERSITY
and the TEXAS AGRICULTURAL EXPERIMENT STATION (collectively referred to as 'A&M'
in this Agreement) each of which is a component of The Texas A&M University
System; and SUREBEAM CORPORATION, (referred to herein as "SUREBEAM"), a
corporation organized under the laws of the state of Delaware and having a
principal place of business at 3033 Science Park Road, San Diego, California.

RECITALS

WHEREAS, SUREBEAM is engaged in the business of designing, manufacturing,
selling, installing, operating, and servicing product disinfestation,
pasteurization and sterilization equipment and systems, including electron beam
and x-ray equipment and systems; and,

WHEREAS, A&M and SUREBEAM desire to pursue an arrangement whereby the parties
will jointly operate and share access to certain of SUREBEAM's equipment which
will be placed at A&M's facilities in order to realize a broad spectrum of
benefits including research, development, educational, economic and other
benefit; and

WHEREAS, it is the intent of the parties that title to the equipment pass to A&M
at the end of the term of this Agreement;

NOW, THEREFORE, in consideration of the mutual covenants and Agreements
contained herein, and the benefits to be derived by both parties, A&M and
SUREBEAM agree as follows:

1.       DEFINITIONS. As used herein, these terms shall have the following
         meanings unless the context clearly requires a different construction:

         1.1      "AGREEMENT" shall mean this Memorandum of Agreement, including
                  any and all written attachments, exhibits, and amendments
                  thereto.

         1.2      CONFIDENTIAL INFORMATION" Information which any party to this
                  Agreement discloses to any other party, provided that the
                  information concerns or arises out of this Agreement and is
                  made in a written document marked "Confidential." The
                  following classes of information are specifically excluded
                  from this definition of "CONFIDENTIAL INFORMATION".

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                  1.2.1    Information which is available to the public at the
                           time it is disclosed,

                  1.2.2    Information which becomes available to the public
                           without a breach of this Agreement,

                  1.2.3    Information which the recipient already possesses at
                           the time it is disclosed,

                  1.2.4    Information which is internally developed by the
                           recipient independently of and wholly without
                           knowledge of the CONFIDENTIAL INFORMATION, and,

                  1.2.5    Information which is lawfully disclosed to the
                           recipient by a third party which makes such
                           disclosure without a breach of any secrecy Agreement.

         1.3      "FACILITIES" shall mean the University's facilities located at
                  400 Discovery Drive, College Station, Texas.

         1.4      "INTELLECTUAL PROPERTY RIGHTS" shall mean any and all
                  intellectual property rights relating to the SUREBEAM SYSTEM
                  including, without limitation, any patents, patent
                  applications, copyrights, trademarks, service marks, trade
                  secrets, and know-how.

         1.5      "PERSON" shall mean any individual, entity, or governmental
                  entity.

         1.6      "SUREBEAM SYSTEM" shall mean, collectively, two (2) of
                  SUREBEAM's patented electron beam systems, and one (1) X-ray
                  system.

2.       CONSTRUCTION OF SYSTEM SHIELD/FACILITIES LEASE

         2.1      Facilities Lease. Shortly after execution by both parties of
                  this Agreement, and in consideration for a total one-time fee
                  of $1.00, the parties will enter into a Facilities lease (the
                  "Lease"). Under the terms of the Lease, A&M will provide
                  SUREBEAM with sufficient space at the Facilities to
                  accommodate the placement and operation of a System for a
                  period of ten (10) years.

         2.2      Construction. SUREBEAM agrees to construct a system shield and
                  any necessary connecting structures for the purpose of housing
                  the SUREBEAM SYSTEM, to be located adjacent to A&M's
                  Facilities. A general description of the system shield and
                  appurtenances is attached hereto as Exhibit

         2.3      A&M Standards. SUREBEAM agrees that the construction operation
                  and all activities of its contractor(s) and subcontractor(s)
                  will be strictly in accordance with A&M policies, rules, and
                  regulations concerning construction in the Research Park
                  and/or on its property in general.

                                        4
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         2.4      Prior Approval. A&M will review and approve in advance the
                  plans for the system shield, and will not unreasonably
                  withhold such approval. A&M will provide assistance as needed
                  to allow SUREBEAM to successfully complete construction of the
                  system shield.

         2.5      Conveyance of Title. Upon completion of the system shield,
                  SUREBEAM will convey full and unconditional title to the
                  system shield and any connecting structures to A&M. This
                  conveyance will not convey title to the SUREBEAM SYSTEM.
                  Transfer of ownership of the SUREBEAM SYSTEM shall be governed
                  by other provisions of this Agreement.

         2.6      Modifications and Costs. Any modifications to the system
                  shield made after conveyance of title to the system shield
                  will be at SUREBEAM's expense unless the parties agree
                  otherwise in writing.

         2.7      Benefit to SUREBEAM. SUREBEAM acknowledges and agrees that the
                  commitment by A&M to permit construction of the system shield
                  and use of its other facilities represent a significant
                  economic benefit to SUREBEAM.

3.       UTILIZATION AND OWNERSHIP OF THE SUREBEAM SYSTEM

         3.1      Access to SUREBEAM SYSTEM. During the term of this Agreement,
                  access to the SUREBEAM SYSTEM will be permitted in accordance
                  with the following:

                  3.1.1    By A&M: A&M will have exclusive access to the
                           SUREBEAM SYSTEM for up to fourteen (14) hours per
                           day, seven (7) days a week.

                  3.1.2    By SUREBEAM: SUREBEAM will have exclusive access to
                           the SUREBEAM SYSTEM for no less than ten (10)
                           per day, seven (7) days a week. Notwithstanding the
                           foregoing, the maximum amount of time SUREBEAM may
                           have exclusive access may not exceed a maximum of
                           twenty-five percent (25%) of the total
                           SUREBEAM SYSTEM capacity as determined on a calendar
                           week  basis. Total SUREBEAM SYSTEM capacity will be
                           determined based upon a mutually agreed upon
                           calculation taking into account typical product,
                           system design, system down time and operating history
                           of other SUREBEAM SYSTEM installations.

                  3.1.3    Prime Hours. Access by either party during the
                           "prime" hours of 8:00 a.m. through 5:00 p.m., local
                           time, will be allocated equally


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                           between the parties based upon their respective
                           organizational schedules.

         3.2      Economic Benefits. Use of the SUREBEAM SYSTEM by either party
                  will include but not be limited to research, development and
                  test-market related processes. SUREBEAM will be entitled to
                  receive any and all economic benefits resulting from its usage
                  of the SUREBEAM SYSTEM during the term of this Agreement.
                  SUREBEAM will be allowed to brings its customers and potential
                  customers to the Facilities. SUREBEAM will, after recouping
                  its expenses directly attributable to installation and
                  operation of the SUREBEAM SYSTEM, an annual unrestricted gift
                  to the Institute of Food Science and Engineering of
                  ten percent (10%) of the net income realized by SUREBEAM's use
                  of the SUREBEAM SYSTEM at the Facility during its exclusive
                  operating time, as described herein.

         3.3      Maintenance and Utilities. During the term of this Agreement,
                  SUREBEAM will, at its own expense, maintain and upgrade the
                  SUREBEAM SYSTEM for usage by both SUREBEAM and A&M. In
                  addition, SUREBEAM will pay utility costs incurred during its
                  exclusive use of the SUREBEAM SYSTEM. A&M will maintain the
                  Facilities at no cost to SUREBEAM, and shall pay for utility
                  costs incurred during its use of the SUREBEAM SYSTEM. Utility
                  costs incurred during joint use of the SUREBEAM SYSTEM by both
                  A&M and SUREBEAM will be borne one-half by each party.

         3.4      Management team. A&M and SUREBEAM will establish a management
                  team of no less than five (5) persons to assist in the
                  administration of this Agreement and related activities. The
                  Director of Food Science & Engineering shall be a member of
                  the management team. A&M and SUREBEAM will each select at
                  least two individuals to serve on the team. Any change in
                  membership will be communicated to the other party in writing.
                  At least one team member from each party will be designated as
                  the point of contact for matters related to this Agreement.

         3.5      Research and Development Programs.

                  3.5.1    Services of A&M Employees. A&M will use its best
                           efforts to accommodate SUREBEAM's requests for A&M
                           employees, including faculty members, to consult or
                           provide other services to SUREBEAM during the term of
                           this Agreement. Such services shall be provided in
                           accordance with all applicable A&M policies, rules,
                           and regulations, and the employees shall remain A&M
                           employees for all purposes while performing such
                           services. A&M will provide SUREBEAM with monthly
                           invoices showing the cost of salaries, wages,
                           benefits and other expenses of employing such
                           persons,

                                        6


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                           and SUREBEAM agrees that it will pay such invoices in
                           full within thirty (30) days of receipt. It is
                           understood that no A&M employee will be required to
                           perform services for SUREBEAM or any other party
                           under this Agreement, and that any A&M employee whose
                           services are requested by SUREBEAM retains the
                           ability to decline such a request without being
                           subject to any penalty or adverse action by A&M.

                  3.5.2    Cost. SUREBEAM will reimburse A&M the cost of any
                           employee's salary and benefits for hours spent
                           working on SUREBEAM's behalf. No payment shall be
                           made by SUREBEAM directly to any A&M employee without
                           prior approval of A&M in accordance with applicable
                           rules, regulations, and policies.

         3.6      Research Data and Information.

                  3.6.1    Access to A&M Information. SUREBEAM will have access
                           to research data and information produced as a result
                           of A&M's use of the SUREBEAM SYSTEM during the term
                           of this Agreement. Such access will be granted
                           consistent with the requirements of any applicable
                           Agreement between A&M and any third party. A&M
                           retains the right to enter into third party
                           Agreements which may limit or prevent SUREBEAM from
                           having access to information and data produced under
                           such Agreements.

                  3.6.2    Ownership of Intellectual Property. Any Intellectual
                           Property owned or claimed by SUREBEAM prior to the
                           effective date of this Agreement shall remain its
                           property. Nothing in this Agreement shall be
                           construed as a transfer or license of any
                           Intellectual Property rights to any entity or person.

                  3.6.3    Newly Created or Discovered Intellectual Property.
                           Subject to section 3.6.2, ownership rights to any new
                           inventions created or developed under SUREBEAM
                           sponsorship during the term of this Agreement by
                           either party shall be shared equally between A&M and
                           SUREBEAM. Upon mutual agreement to obtain patent
                           protection for any such information, the parties will
                           share equally the costs of any patent applications,
                           registration or maintenance fees, including attorneys
                           fees and costs, that may be incurred in order to
                           obtain patent protection. In the event that either
                           party shall elect in writing not to participate in
                           obtaining patent protection for such information,
                           such party will, upon request, convey, license, or
                           otherwise make available as it deems best, its
                           interest in the intellectual property to the other
                           party.

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<PAGE>

                  3.6.4    Control and Publication. A&M shall retain ownership
                           and control over all rights in data generated during
                           its exclusive use of the SUREBEAM SYSTEM, including
                           rights of publication. Such data may include, but
                           shall not be limited to, information in the following
                           areas:

                           -        Consumer testing panels

                           -        Ion beam research

                           -        Food and medical product applications
                                    testing

                           -        Accelerator design research

                           -        Other research or activities as may be
                                    agreed by A&M and SUREBEAM.

                  3.6.5    Research Sponsorship. A&M intends to seek sponsorship
                           for research utilizing the SUREBEAM SYSTEM to be
                           funded by public and private entities. Such research
                           will include, but not be limited to, the areas of
                           food safety, packaging material interactions,
                           interactions with classes of food, additives, beam
                           delivery and dosimetry techniques, consumer research
                           and applicability to additional classes of products.
                           Prior to entering into any Agreement for funding or
                           sponsorship with any entity that is engaged in the
                           manufacture or sales of equipment or the provision of
                           services that are substantially similar to the
                           SUREBEAM SYSTEM or services, A&M will seek written
                           approval of SUREBEAM.

                  3.6.6    Consortia and Groups. A&M may also seek the formation
                           of one or more consortia of interested parties to
                           assist in obtaining funding for general research in
                           the fields listed in 3.6.3, as well other fields, and
                           may seek the formation of a national center
                           designation for a program and facility combination.
                           SUREBEAM acknowledges that such activities are
                           consistent with the intent and purposes of this
                           Agreement.

                  3.6.7    Identification. Any designation of the Facilities
                           and/or A&M as a Center, National Laboratory, or other
                           specialized name shall make no reference to SUREBEAM
                           unless the parties agree otherwise in writing.

4.       ADDITIONAL EMPLOYEES

         4.1      Positions to be created. SUREBEAM will provide to A&M annually
                  research grant funding, in an amount mutually agreed to by
                  SUREBEAM and A&M, to be used to fund salaries and benefits for
                  three (3) employment positions to be created by A&M at the
                  Institute of Food

                                        8


<PAGE>

                  Science & Engineering. The positions shall include a facility
                  manager, maintenance technician, and a quality assurance
                  specialist. The duties of these positions shall be devoted to
                  operation and maintenance of the SUREBEAM SYSTEM and related
                  equipment and facilities. The positions shall be full-time and
                  the persons employed shall be employees of one or more
                  components of The Texas A&M University System. SUREBEAM will
                  be consulted prior to hiring any individuals for any of the
                  positions.

         4.2      Alternative funding sources. A&M remains free to use other
                  sources of funds for the purpose of paying salaries and
                  benefits for any or all of the positions described in 4.1,
                  above.

5.       CONFIDENTIALITY OF INFORMATION

         5.1      Duty of Recipient. The recipient of CONFIDENTIAL INFORMATION
                  shall hold all CONFIDENTIAL INFORMATION in confidence and
                  shall not disclose it nor permit it to be disclosed to any
                  other party without the written consent of the owner.

         5.2      Disclosure for Compliance. It is understood and agreed that
                  the recipient of any CONFIDENTIAL INFORMATION shall not be
                  precluded from disclosing such CONFIDENTIAL INFORMATION if
                  such disclosure is made in response to a valid order of a
                  court or other governmental body of the United States, the
                  State of Texas, or any political subdivision or an opinion of
                  the Attorney General of the State of Texas; provided, however,
                  that the recipient first shall have given notice to the
                  disclosing party sufficient to allow the other party to seek
                  protection from such order. Furthermore, it is understood and
                  agreed that nothing in this Agreement shall prevent either
                  party from disclosing information to the United States, the
                  State of Texas or any State or foreign government, or to any
                  agency or representative thereof, which is required to be
                  disclosed by law or regulation or to satisfy any governmental
                  regulation relating to the use of the SUREBEAM SYSTEM.

6.       TERM AND TERMINATION

         6.1      Term. This Agreement shall commence on the effective date
                  hereof, and shall continue for a period of ten (10) years
                  until terminated pursuant to this Agreement or by law. As an
                  agency of the State of Texas, A&M may not legally commit to
                  expend funds for any fiscal year beyond the current biennium
                  (September 1, 1999 through August 31, 2001.) In the event that
                  funds are not appropriated by the Legislature or other sources
                  in sufficient sums so as to allow A&M to fulfill its
                  obligations under this Agreement,

                                        9
<PAGE>

                  this Agreement shall terminate as of August 31 of the year
                  immediately preceding such fiscal year.

         6.2      Termination for Breach or Non-Performance. In the event of a
                  material breach of this Agreement, including non-performance
                  of a duty arising hereunder, the non-breaching party shall
                  provide the other with written notice of such breach. The
                  party alleged to have breached this Agreement shall have 60
                  days from the receipt of the notice to cure the breach. If the
                  breach is not cured within that time, the non-breaching party
                  may terminate this Agreement by giving written notice of its
                  election to do so. A breach by either party of Article 5 may
                  result in immediate termination by the non-breaching party
                  upon written notice to the other.

         6.3      Mutual consent. This Agreement may be terminated at any time
                  by the mutual written consent of both parties.

         6.4      Schedule for removal of SUREBEAM SYSTEM. Upon termination of
                  this Agreement for any reason, SUREBEAM will request in
                  writing a schedule of times and dates to allow removal of the
                  SUREBEAM SYSTEM from the facilities. A&M agrees to work with
                  SUREBEAM to establish such schedule in a timely manner, and to
                  facilitate such removal as far as reasonably possible. All
                  costs associated with the removal of the SUREBEAM SYSTEM will
                  be the sole responsibility of SUREBEAM.

7.       WARRANTIES AND LIABILITIES

         7.1      Limited warranty of SUREBEAM. SUREBEAM warrants that it has
                  the right to enter into this Agreement and fully perform its
                  obligations hereunder. The parties understand and agree that
                  SUREBEAM is providing the SUREBEAM SYSTEM on an "as is" basis.
                  Except as otherwise expressly provided in this Agreement, and
                  ONLY TO THE EXTENT PERMITTED BY THE LAWS AND THE CONSTITUTION
                  OF THE STATE OF TEXAS, SUREBEAM makes no warranties of any
                  kind, express or implied, with respect to the SYSTEM or any
                  CONFIDENTIAL INFORMATION that may be disclosed, and expressly
                  disclaims any and all implied warranties, including the
                  warranties of merchantability and fitness for a particular
                  purpose and non-infringement.

         7.2      The parties agree that SUREBEAM will be only be liable for
                  damages of any kind to the extent that such damages result
                  directly from the acts or omissions of SUREBEAM employees,
                  representatives or agents.

         7.3      Insurance. SUREBEAM agrees that it will procure a policy of
                  insurance covering the SUREBEAM SYSTEM against damage or loss,
                  and a policy

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<PAGE>

                  of liability insurance for personal injury, death, or property
                  damage which may be caused by the SUREBEAM SYSTEM, and to name
                  A&M as an additional insured on such policies.

         7.4      No waiver of immunity. As an agency of the State of Texas, A&M
                  may not waive its immunity from suit or liability in contract,
                  and such immunities are expressly reserved to A&M under this
                  Agreement.

         7.5      Surviving provisions. The rights and obligations of the
                  parties with respect to provisions which by their nature
                  extend beyond the term of this Agreement will survive
                  termination of this Agreement.

8.       GENERAL PROVISIONS

         8.1      Records. The parties agree to keep books and records which
                  accurately reflect the activities covered by this Agreement.
                  Such information will be maintained during the term of this
                  Agreement and for a period of no less than four (4) years from
                  the date of its termination. The records will be open to
                  inspection by either party upon reasonable notice. Either
                  party may audit such records, and shall bear its own costs
                  incurred in performing said audit.

         8.2      Assignment. SUREBEAM may not assign this Agreement to any
                  party without the prior written consent of A&M, which shall
                  not be unreasonably delayed or withheld.

         8.3      Research funded by SUREBEAM. Separate research Agreements will
                  be negotiated between SUREBEAM and A&M for each research
                  project to be funded by SUREBEAM and such Agreements shall be
                  governed by their own terms and in accordance with established
                  A&M policies.

         8.4      Entirety and Amendments. This Agreement, including any
                  attachments, exhibits, or amendment, represents the entire
                  understanding between the parties with respect to the subject
                  matter hereof. No part of this Agreement may be amended,
                  modified, revoked, or waived except by a writing signed by
                  both parties.

         8.5      Severability. In the event that any term, covenant, condition,
                  provision, or Agreement contained herein is held to be
                  invalid, void, or otherwise unenforceable, the fact that such
                  term, covenant, condition, provision or Agreement is invalid,
                  void, or otherwise unenforceable shall in no way affect the
                  validity or enforceability of any other term, covenant,
                  condition, provision, or Agreement contained herein.

                                       11
<PAGE>

         8.6      Force majeure. Each party shall be excused from any breach of
                  this Agreement that is proximately caused by government
                  regulation, war, strike, act of God, or other similar
                  circumstances normally deemed outside the control of
                  well-managed businesses.

         8.7      Notices. All notices and other communications given or made
                  pursuant to this Agreement shall be in writing and shall be
                  deemed to have been duly given or made as of the date
                  delivered, mailed, or transmitted, and shall be effective upon
                  receipt, if delivered personally, mailed by registered or
                  certified mail (postage prepaid, return receipt requested) to
                  the parties at the following addresses (or at such other
                  address for a party as shall be specified by like change of
                  address):

                         For A&M

                         Agriculture Program Contracts and Grants
                         TAMUS 2147
                         Texas A&M University
                         College Station, TX 77843-2147

                         For SUREBEAM:

                         Surebeam Corporation
                         3033 Science Park Road
                         San Diego, CA 92121
                         Att: President

         8.8      Schedules. SUREBEAM acknowledges that A&M operates on a
                  holiday schedule set on an annual basis by its governing
                  board, and that on such holidays its offices, classrooms, and
                  laboratories, including the facilities covered by this
                  Agreement, are officially closed. A&M will provide SUREBEAM
                  with a listing of all official holidays during each year of
                  this Agreement. The parties may agree in writing to any
                  modification of operating days and hours as necessary to
                  permit both to operate in an efficient manner.

         8.9      Governing law. In accordance with the requirements of law,
                  this Agreement shall be governed and construed in accordance
                  with the laws of the State of Texas. Venue for any action
                  herein shall lie in Brazos County, Texas.

         8.10     Press Releases. Neither party shall issue a press release
                  concerning this Agreement or the work performed hereunder
                  without the prior written consent of the other party, which
                  consent will not be unreasonably withheld; provided, however,
                  the parties agree that SUREBEAM and A&M

                                       12
<PAGE>

                  will do a press release concerning this Agreement upon its
                  execution by both parties.

9.       DISPUTE RESOLUTION PROCESS. The dispute resolution process provided for
         in Chapter 2260 of the Government Code shall be used, as further
         described herein, by A&M and SUREBEAM to attempt to resolve any claim
         for breach of contract made by SUREBEAM.

         9.1      SUREBEAM's claim for breach of this contract that the parties
                  cannot resolve in the ordinary course of business shall be
                  submitted to the negotiation process provided in Chapter 2260,
                  subchapter B, of the Government Code. To initiate the process,
                  SUREBEAM shall submit written notice, as required by
                  subchapter B, to DR. EDWARD A. HILLER, DIRECTOR. Said notice
                  shall specifically state that the provisions of Chapter 2260,
                  subchapter B, are being invoked. A copy of the notice shall
                  also be given to all other representatives of A&M and SUREBEAM
                  otherwise entitled to notice under this Agreement. Compliance
                  by SUREBEAM with subchapter B is a condition precedent to the
                  filing of a contested case proceeding under Chapter 2260,
                  subchapter C, of the Government Code.

         9.2      The contested case process provided in Chapter 2260,
                  subchapter C, of the Government Code is SUREBEAM's sole and
                  exclusive process for seeking a remedy for any and all alleged
                  breaches of contract by A&M if the parties are unable to
                  resolve their disputes under subparagraph (A) of this
                  paragraph.

         9.3      Compliance with the contested case process provided in
                  subchapter C is a condition precedent to seeking consent to
                  sue from the Legislature under Chapter 107 of the Civil
                  Practices and Remedies Code. Neither the execution of this
                  Agreement by A&M nor any other conduct of any representative
                  of A&M relating to the Agreement shall be considered a waiver
                  of sovereign immunity to suit.

         9.4      The submission, processing and resolution of the SUREBEAM's
                  claim is governed by the published rules adopted by the
                  Attorney General of the State of Texas, pursuant to Chapter
                  2260, as currently effective, hereafter enacted or
                  subsequently amended. These rules are found at Chapter 68,
                  Texas Administrative Code.

         9.5      Neither the occurrence of an event nor the pendency of a claim
                  constitutes grounds for the suspension of performance by the
                  SUREBEAM, in whole or in part.

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<PAGE>

         9.6      The designated individual responsible on behalf of A&M for
                  examining any claim or counterclaim and conducting any
                  negotiations related thereto as required under Sections
                  2260.052, Texas Government Code, shall be FRANK E. GILSTRAP,
                  ASSOCIATE AGENCY DIRECTOR.


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